According to reports from Economic Times, L&T electrolyser manufacturing has postponed its planned expansion of increasing its capacity to 1 GW at Hazira, Gujarat, as weaker-than-expected green hydrogen demand delays investment decisions in India’s emerging clean hydrogen market.
Key Takeaways
- L&T has delayed plans to expand its electrolyser manufacturing capacity from 400 MW to 1 GW.
- The proposed expansion at Hazira, Gujarat, was expected to require an investment of ₹450–550 crore and had been targeted for completion by March 2027.
- L&T has already invested ₹293 crore in its electrolyser manufacturing project.
- The company says it can ramp up manufacturing capacity to 1 GW within 12–18 months once market demand strengthens and more projects are announced.
Weak Demand Puts Expansion on Hold
Larsen & Toubro has pushed back its plan to expand electrolyser manufacturing capacity as demand for green hydrogen has not developed at the pace the company had anticipated. L&T Electrolysers Ltd (LTEL), a wholly owned subsidiary of L&T Energy GreenTech Ltd, currently has a manufacturing capacity of 400 MW.
The company had planned to establish 1 GW of manufacturing capacity at Hazira in Gujarat. The proposed expansion was expected to involve an investment of ₹450–550 crore and was previously targeted for completion by March 2027. An industry executive familiar with the development said demand conditions had influenced the company’s decision to delay the expansion.
According to the Economic times, the executive said that the demand for green hydrogen has not panned out as L&T expected, so the company has decided not to expand the capacity from 400 MW right now.
L&T Says It Can Quickly Scale Electrolyser Manufacturing to 1 GW
Despite postponing the immediate expansion, L&T says its existing manufacturing infrastructure can support a rapid scale-up when demand improves. In a response to Economic Times, Derek Shah, MD and CEO of L&T Energy GreenTech, said the company’s current assembly and robotic line capacity was sufficient to meet existing domestic demand.
Shah further said, “We are poised to quickly ramp up the assembly/manufacturing line to 1 GW as soon as the market opens up and more projects are announced in the green hydrogen/green ammonia/green methanol space.”
According to him, L&T could increase its manufacturing capacity to 1 GW within 12 to 18 months if announced domestic projects and export opportunities materialise. He added that green hydrogen and green ammonia projects typically require more than 30–40 months to complete, providing equipment manufacturers sufficient time to increase production capacity.
“Since the projects of green hydrogen and green ammonia plants typically take upwards of 30/40 months for completion, we do not envisage a challenge to ramp up the manufacturing of the electrolyser plant to required levels to meet the demands of the industry,” Shah said.
L&T Has Invested ₹293 Crore So Far
L&T has invested ₹293 crore in the electrolyser manufacturing project to date. LTEL manufactures electrolysers based on pressurised alkaline technology under a technology licensing agreement with France-based McPhy Energy.
The company had positioned the planned capacity expansion to support India’s growing green hydrogen sector, including potential demand from green ammonia and green methanol projects.
Bioenergy Business Analysis: What This Means for India’s Green Hydrogen Market
L&T’s decision to postpone its 1 GW electrolyser expansion is an important market signal. The announced green hydrogen ambitions have yet to translate into sufficient near-term equipment demand. For investors and policymakers, the development underscores the importance of moving projects from announcements to final investment decisions and construction.
However, L&T’s ability to potentially ramp up to 1 GW within 12–18 months suggests the company is not exiting the market. Instead, it appears to be adopting a demand-led manufacturing strategy, preserving capital while maintaining the flexibility to scale as green hydrogen, ammonia and methanol projects progress.
Read also: India accelerates green hydrogen production; VOC port designated as major green hub
